Statistical Analysis a Panacea?

Availability of market data often determines which techniques are employed in the valuation of property. In the absence of sufficient comparable properties, but with a wealth of market data available, analyst can use statistical analysis to test how certain factors affect market prices. Sometimes, analyst can distill certain market patterns to support valuation. When there are few comparables, statistical, graphic, and trend analysis can lend a helping hand.

On the flip side, there are times where there are multiple sufficiently comparable properties where more precise information can be gleaned through statistical analysis, such as in large condo communities or in a planned unit develop. Use of regression models, coefficient of variation, and mean derivation can quantify how several factors in housing prices influence one another in a given market area.

Care must be taken to ensure that mathematical precise formulas are used to reflect market preferences, differentiating between elements of causation and correlation. When analyzing vast areas of property where the use of appraisers becomes time and cost prohibitive, such as in tax assessments, computer models provide an efficient way to analyze value.

Any questions or for FREE customized Market Reports, automatic email updates on properties that fit your criteria, or Realtor Referrals, please EMAIL ME or call me at 734-478-9270. -Anwell Tsai